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The Quiet Genius of Apple

It's not just about the devices and the software. It's about how Apple sucks you in and doesn't let go.

The iPad 2 came out this week, and like many other people I was glued to my computer, waiting to see what Apple(Nasdaq: AAPL) had to say. I came away with a ho-hum thought of the new iPad, but I saw some quite genius behind the applications that Apple is including in its new products.

Apple has slowly created a suite of products that reinforces itself and gets buyers sucked into coming back again and again for their technology needs. This week we saw the slow and steady proliferation of Apple's next product-integration technology: Airplay.

To understand why I think Airplay is so important and how it helps all of Apple's products, let's take a quick look back at how Apple has been building this empire.

Act 1: iPodIt started with a stylish musical device, the iPod, and its computer software, iTunes. Apple made an iconic device that brought millions of users into the iTunes Store. And it was the success of iTunes that allowed for the next big step in Apple's master plan.

Act 2: iPhoneWhen the iPhone was released, it blew the socks off any phone we'd previously known. Apple's innovative spirit showed through in redefining the phone as we know it, and others have been trying to copy it ever since. Google's (Nasdaq: GOOG) Android now has a greater market share than the iPhone, but it was Apple that took the first step in redefining the mobile phone.

The real genius of the iPhone was the App Store and the device's seamless integration with all things Apple. My iCal, Address Book, music, videos, notes, and even browser bookmarks transfer easily between my Mac and my iPhone. It isn't as if you couldn't do most of this with a PC, but the ease makes the transition to a Mac much more enticing. Others think so, too: Mac sales were up to 13.7 million units in fiscal 2010, from 7.1 million units in fiscal 2007, when the first iPhone was released and the App Store was just beginning to show its possibilities.

Act 3: iPadThe iPad has been a smash hit in its first year, and as we review the updated iPad 2, what I took from the device was a new way to connect other Apple devices with Airplay.

Airplay is really just the ability to stream music, photos, or videos among Macs, iPhones, iPads, and Apple TVs. In iOS 4.3, app developers will be able to use this technology in their applications, and a variety of other third-party devices, such as stereos and picture frames, are adding the technology.

This is important for Apple, as it slowly makes a move beyond our computers and mobile phones and into our living rooms. Cable companies are scrambling to make iPad-friendly apps for viewing and controlling TV shows, both live and on-demand. Comcast(Nasdaq: CMCSA) and Time Warner Cable(NYSE: TWC) are both leveraging iPad applications on their cable networks. And Netflix(Nasdaq: NFLX), although not an early adopter of Airplay, can be seen on almost any Apple device.

A company that was once just computers is now the center of music and video at home. And the integration between the devices makes other Apple products all the more enticing. With MacBook and iPhone in tow, I am much more likely to buy an iPad than I am a Motorola Mobility(NYSE: MMI) Xoom, despite good reviews.

The next act, one Fool's dreamWhat does Apple have up its sleeve next? On the outside of Apple, we don't really know. But I think you can deduce a few things from recent actions.

Apple has demonstrated that it wants the App Store to continue to grow in both scale and capability. It also has made slow steps into our living rooms, with Apple TV and iPad applications.

So I think it's logical that the home theater is next. I've long hoped that the Apple TV would be a truly revolutionary device, and the foundation is set for that to happen. In the past, I've called for TiVo-like capabilities, but now it looks as if gaming would make just as much sense. iPhones and iPads are already able to connect to the Apple TV to control it, so why not give developers the chance to use a full screen for games?

This would be a boon not only for Apple; it would also give much-wanted flexibility to game makers. Activision Blizzard(Nasdaq: ATVI) has complained that Microsoft's Xbox Live doesn't kick back any of its revenue to the developers making the games. An Apple TV game would open not only new gaming possibilities but also payment options. There could be tiered pricing and subscriptions, and the developer would control everything.

The quiet genius behind Apple's products is the way they integrate and reinforce each other. Once you start making the move to Apple products, it's a slippery slope, and there may not be a way back. This Fool has found that out the hard way.